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Expect the Unexpected

By Chris Winkler - Founder | Principal

In recent years, investors have faced unprecedented challenges due to global events. These challenges have once again taught us valuable lessons about the importance of having a financial plan that works for your unique life circumstances.

Think back to December 2019. The economy was humming. Unemployment, interest rates, and inflation were at historically low levels. But then what happened?

A global pandemic hit. By the end of March, the S&P 500 had dropped nearly 20% in value. Later in the year, scientists announced that they’d developed a vaccine, and markets roared back.

  • FAANG stocks soared … before giving up a lot of gains
  • Meme stocks shot way up … and fell back down
  • Bitcoin and other cryptocurrencies reached record highs … and then crashed
  • Inflation spiked to the highest levels most of us have ever experienced
  • And Russia invaded Ukraine, sparking a humanitarian crisis and geopolitical uncertainty

I don’t know anyone who predicted all of that back in December 2019. How did markets react? Did they do their job?

When news of the pandemic hit, markets adjusted and prices went down. In other words, when uncertainty peaked around March 2020, investors demanded a higher return to jump into the market. Then, when news of a vaccine spread, the market adjusted its expectations accordingly. In fact, over the past three years, the Russell 3000 averaged a return of 10%, the historical average for US equities since 1926.

In the short term, there are often wild swings up or down. Making an impulsive change during either can be dangerous. And operating without discipline can be perilous.

While it's impossible to forecast the future, I do believe in the power of human ingenuity to fix problems big and small, innovating across thousands of publicly traded companies worldwide. The incentives for not only survival, but great progress, are aligned.

The future is full of uncertainties, and also, of promise. Having a thoughtfully executed plan will help you be prepared for both.

My gratitude,